Hospital prices should be published

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Steven Sonenreich, chief executive of Mount Sinai Medical Center in Miami Beach, has pledged a move virtually unheard of in the health care industry: to publish what his hospital charges insurers for procedures. “We will post our prices relative to Blue Cross and Aetna, our contractual prices,” Sonenreich said during a local radio appearance in May. He went on to challenge other hospitals to follow his lead, and they should.

Hospitals today have enormous discretion over what they charge, as evidenced by data released by the Centers for Medicare and Medicaid Services in early May from 3,000 medical centers nationwide that accept government-insured patients. Prices diverge drastically. One example from Greater Boston: The average price for treatment of a heart attack without complications at Brigham and Women’s Hospital was $36,111 in 2011; 12 miles away, Winchester Hospital charged an average of $5,987 for the same diagnosis.

Such pricing disparities have occurred largely because patients traditionally paid little attention to what hospitals charge. Insurance picked up the bill. And hospitals, which cut different deals with different health plans, worried about losing a negotiating advantage by letting insurers know what their competitors were really paying. In the meantime, the uninsured paid full freight.

But that’s changing. Many newer policies are replacing flat co-pays with requirements that patients pay a percentage of medical costs. Employers are opting for high-deductible plans that also ask members to pay more out of pocket. All in all, Americans are becoming more price-conscious consumers of health care and want more information.

Which makes Sonenreich’s push for transparency all the smarter. Competing on price is likely the future for many hospitals. On the same radio show, Brian Keeley, CEO of Baptist Health South Florida, demurred from matching Sonenreich’s pledge but did concede, “That’s where the whole industry is going.” If the result is lower health care costs, the sooner the better.

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